Some home owners let insurance policies lapse in face of high cost

By earthnews
9 months Ago

Some home owners let insurance policies lapse in face of high cost

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More than two-thirds of respondents in Consumer NZ’s latest insurance satisfaction survey are concerned about the cost of house insurance, with 8 percent of homeowners letting policies lapse due to high costs.

Investigative team leader at Consumer NZ Rebecca Styles said the results continued a trend the consumer watchdog began to see last year.

“We urge New Zealanders to review their current level of cover, and shop around,” Styles said.

“It’s likely you’ll find a better deal and can maintain some level of protection – which is better than no cover at all.”

Styles said in the past 10 years, house insurance had increased 97 percent, while contents insurance had gone up 48 percent.

“Wellington has been the hardest hit with premium price increases for a standard house – up 29 percent from this time last year, followed by Auckland up 26 percent.

“For a large house, premium prices rose most in Auckland – up 28 percent – followed by Hamilton on 24 percent. Dunedin also had increases for standard and large house premiums, up 12 percent and 9 percent, respectively.”

Styles said the cost of reinsurance, extreme weather events and increased use of risk-based pricing on individual properties were all factors in the price rises.

“Insurers also now have access to granular and more accurate information around the risks posed to particular areas and properties in New Zealand.

“Given the more frequent and extreme weather events Aotearoa is experiencing, and their related claims, the cost of insuring properties has gone up, and these costs are being passed onto consumers.

“The best thing people can do is to review their current level of cover, shop around and get ready to switch when you find a cheaper policy – they are out there.”

Styles said the survey showed that only one in five respondents was likely to change insurers in the next 12 months.

“Our surveying shows time and time again that it’s difficult to compare insurance providers to find the best deal. Now, to make things trickier many insurers won’t provide online quotes without a risk assessment of the property.”

Styles said there were ways to ensure homeowners could stay insured.

1. Opt for a larger excess

“Instead of paying $500 on a claim, you could increase it to between $750 and $2500 and this can drop your premium.”

Styles gave this advice with one caveat. “If you decide to increase the excess, make sure you can afford it. Should disaster strike – you don’t want to risk paying for insurance you can’t even access.”

2. Reassess your needs

If a homeowner received quotes for insurance that they still couldn’t afford Styles said they could consider choosing a fire-only or fire and burglary policy.

“While you may not be covered for everything, it will be cheaper than comprehensive or ‘all-risk’ cover, and crucially, mean you’re still entitled to EQC cover in the event of a natural disaster.”

3. Get that discount

Styles said Consumer NZ’s premium price survey found some insurers offered discounts for taking out combined house and contents policies, being claims free for a set number of years and for having an alarm.

“Given rising costs, paying for your premium for the year ahead (rather than monthly, for example) may afford you an annual discount. Given rising costs, this is unlikely to be a viable option for many consumers.

“If that’s you – know you’re not alone.”

Styles said Consumer NZ members could better compare insurance products online.